Set up on the lines of Grameen Bank of Bangladesh, AKHUWAT, a Lahore-based NGO, gives interest-free loans to the poorest of the poor. And over 33 per cent of beneficiaries are women. You! takes a look…

By Najma SadequeWould the late Benazir Bhutto have approved to have an expensive monument even though she is not in this world and it would do her no good whatsoever? That too, at a time when the country is dead broke with no hope of ever being able to repay trillions of rupees in debt? And this being planned in the same breath with the government extending its beggars’ bowl to the world at large with the plea that it has nothing left with which to help its flood-affected victims?
Building memorials or monuments to the dead are natural, accepted responses from individuals, communities or governments. Whatever Ms. Benazir Bhutto’s thinking might have been on various matters which may have matched or differed from that of some others, this is one thing she definitely would not have approved of under the present circumstances.
Instead, she must be turning in her grave at the thought of snatching succour from the mouths of the hungry and ruined to throw after bricks and mortar in her name – just like anyone with any common sense and conscience would be outraged.
After recovering from the shock of total loss, people are usually eager to work and start life anew. But return to self-reliance is only possible if they have the necessary materials to work with to rebuild their homes and lives, and it is best given as an easy loan on easy, small repayable terms, without any interest attached to it.
That is the sort of help that comes from AKHUWAT, a Lahore-headquartered non-profit micro-finance NGO which in desperate, deserving cases, even settles outstanding amounts to loan sharks. AKHUWAT rightly calls their assistance ‘liberation loans’.
Ever since the seventies when Grameen Bank of Bangladesh began to successfully extend collateral-free microcredit to the poor, microfinance has spread out to many poverty-stricken parts of the world. For a while, many development practitioners began to believe that a solution for poverty had been discovered.
But after some time, the limitations of conventional micro-lending began to emerge. Firstly, while micro-loans went to the poor, they did not go to the poorest of the poor, only those who could get co-loanees or guarantors; and secondly, loans did not come interest-free. It still left the majority of the poor – the poorest – high and dry.
Then one day, Dr. Amjad, a former civil servant, involved with microfinance in a rural support programme, and dissatisfied with the way it was NOT working, did something similar to what Dr. Yunus (founder of Grameen bank) had done. He loaned some money to a very poor woman who then bought a sewing machine and went on to become a successful seamstress, satisfactorily supporting her family. Thereafter Dr. Amjad set up AKHUWAT to help the poorest of the poor – those who can’t get access to conventional micro-credit!

Why? Because there is one major difference between Akhuwat and Grameen Bank. Grameen Bank still charges interest, at least 15-17 per cent per annum, while Akhuwat charges none whatsoever. It deducts a small one-time processing fee to cover overheads, while those taking small loans of a few thousands are charged none. Grameen Bank’s popularity arose from the fact that it provided a source of credit to those who had no other options whatsoever, and that borrowers paid only standard annual interest instead of the crippling 10 per cent monthly interest to loan sharks that amounted to 120 per cent a year. It was no wonder that borrowers remained in perpetual debt, never being able to pay off the principal because they were under constant pressure to pay off the monthly charges first.

Grameen’s interest charges were a lot less, the same as other conventional banks – about one-sixth that of loan sharks. In fact, its earlier success led to some major banks, including international banks, to invest in micro-finance because the market for other lending had become completely saturated worldwide, and the poor became the last source of collecting legitimate interest from, of up to 25 per cent per annum. The collective borrowings were huge and they could still make fortunes from poverty. Dr. Amjad Saqib frowns on taking interest from the poor and has applied the principle of Qarze-e-Hasana – helping someone in need – with interest free loans, which is preferable to outright charity. Most loans range from a few thousand to Rs. 30,000 generally, and in special cases even more. So far, Akhuwat has disbursed more than Rs. 800 million and the recovery rate is over an incredible 99.7 per cent! The moral of the story is that people give back if they are able to do so and are not over-burdened.

Do women benefit? They certainly do. Over 33 per cent of beneficiaries are women, and they are being encouraged. Akhuwat’s operational cost is minimal – around 10 per cent of the disbursed amount whereas the cost for conventional microfinance organisations is around 25 per cent. So how does Akhuwat manage to keep it costs so low? “Our cost is low on account of several reasons,” reveals Dr. Saqib, “Part of the staff – top management – is voluntary. We use mosques and simple offices without air-conditioners and furniture. We sit on the floor – farshi seating.”

“There is also a complete ban on cars or jeeps. For a staff of 225, there is no four- wheel vehicle. The salary structure is modest and we rely on a spirit of volunteerism. We do not want to earn profit. Micro finance for us is a responsibility; but for conventional microfinance organisations, it is business and industry.” Akhuwat started its activities in 2001 and was formally registered with the government of Punjab in 2004. “So far it has disbursed more than 70,000 loans to around 50,000 families,” says Dr. Amjad Saqib. “Some are repeat loans – a loan to the same family, once it has repaid the first loan.” Later, Akhuwat was affiliated with the Pakistan Centre for Philanthropy (PCP) and Pakistan Microfinance Network (PMFN) and obtained exemption from deduction of income tax for the donations it receives, from Federal Bureau Revenue (FBR).”

At the moment, Akhuwat is working in 22 cities. “We have 35 branches in these 22 cities,” says Dr. Saqib, “Each branch serves around 1000 poor families on a continuous basis.” When asked about whether the flood victims, especially the landless, be assisted with interest-free loans? He replied, “Yes! The flood victims can be helped too. In fact, this should be the strategy if we are interested in harnessing these people’s potential and making them self reliant. By giving charity and doles we will not be serving these people.”

“We want to maintain human integrity and self respect,” he further explains, “It is the sustainable way to fight poverty. It promotes sacrifice, honour and spirit of solidarity with the poor. Akhuwat has successfully converted the individual practice of Qarz a Hasna into an institutional one. It can now be experimented on a large scale. There is no gender, religious, political or racial discrimination.”

Akhuwat is now planning to expand to other provinces and already has a presence in Karachi which is run by a local partner under Akhuwat’s overall supervision and guidance. It has already disbursed more than Rs. 6 million to more than 500 families in Karachi. “We also have a partner in Nawabshah, and two branches are being opened in Khyber-Pakhtoonkhwa very soon, Insha’Allah,” he adds happily, “We follow a model of replication in which we provide technical support and some seed money to start the programme.”

It means that other microfinance NGOs can also benefit from Akhuwat’s expertise whether on a large scale or small. Non microfinance NGOs and CBOs can also play their part by committing small amounts of money to a revolving fund for poor relatives or neighbours of their staffers, which could be re-lent when the money is returned. A period of charity is absolutely essential in disaster when one has nothing left to live on and is left in a state of helpless shock. It is needed in the short-term to get people back on their feet. But if people are made to receive only inadequate amounts on an ongoing basis, they soon realise there are no other options for them except to resort to begging or thievery as long-term careers, or remaining as social parasites.

Making people dependant on charity for long-term survival without enabling them to be self-reliant, is actually irresponsible, and cruelly condemns people to permanent poverty because the public wealth is not distributed in a way that could provide for all. Now imagine the billion rupees committed for Benazir Bhutto’s monument being put into Akhuwat’s kitty instead. At the government’s promised minimum of 20,000/-, a billion could benefit 50,000 correctly identified deserving families straightaway – which comes to around 500,000 individuals save. And as the money keeps getting returned, it would continue benefiting new as well as the same borrowers indefinitely.

Add to it unpaid taxes by feudals – returned stolen money may be too much to expect of this government – helping the devastated 21 million brethren is very possible. It’s not the amount of money given as much as who it is reliably given and how it is spent. If every person did some microfinance voluntary work, at least for a while, it would not only uplift those in need, it could work wonders for the volunteers’ souls. The sky’s the limit.

This site is still under contruction.

Najma Sadeque’s writings will continue to be added as they come up. Since she never maintained a record, one is faced with the difficulty of finding texts going back some 35 years. This is a request to readers to kindly let me know if they know of any records. An estimated thousand or so are missing. Your help would be appreciated. Thank you. – denebsumbul@gmail.com